The 2020 State Budget Act (Act no. 2/2020, of 31 March) has been published, confirming the expected tax changes.
2019/12/27
Impacts on families
- Slight increase in the IRS deduction for dependants under three years old.
- Partial IRS exemption for young people in their first job, with annual income below €29,179, aged 18–26, not considered dependants and holding at least level 4 of the National Qualifications Framework.
- Progressive IRS rates maintained, with brackets updated by 0.3%, which slightly widens the range of income taxed at the lower rates.
Impacts on companies
- Increase in the slice of SME taxable profit benefiting from the reduced 17% IRC rate, from €15,000 to €25,000 (maximum annual saving of about €400).
- 30% increase in deductible expenses related to public transport passes for employees and pensioners.
- Higher minimum value threshold for passenger vehicles and motorcycles subject to autonomous taxation, from €25,000 to €27,500.
- In tax incentives: the deduction for retained and reinvested profits (DLRR) rises to €12 million, and the SIFIDE II R&D incentive is extended to 2025.
Real estate and local accommodation
- Higher IMI for ruins and building plots in high‑pressure urban areas, and repeal of IMI exemptions for national monuments.
- Increase in IMT on residential properties valued above €1 million.
- IRS/IRC exemptions for rental income under municipal affordable housing programmes.
- Heavier taxation of local accommodation in “containment areas” under the simplified regime: 50% of income becomes taxable (previously 35%).
Foreign pensions and the NHR regime
The main novelty concerns Non‑Habitual Residents (NHR). From 1 April 2020, new NHR beneficiaries are subject to a 10% flat rate on foreign‑source pensions. Taxpayers already registered, or who met the conditions before that date, retain the previous full exemption.
Rita Duarte | [email protected]